With HFCs cutting down their home loan interest rates to a 15-year low, maximum homebuyers are looking forward to shifting their on-going loans to avail favourable terms. Switching to a lender offering interest rates at 6-7% is convenient for a borrower, as it reduces the financial burden considerably.
Simply put, home loan transfer or refinancing is the transferring of an existing home loan from one lender to another to acquire lower rates and services.
Borrowers opt for home loan balance transfer majorly to get a lower interest rate on their home loans. Calculations show that an interest difference of even 0.5% can lead to considerable savings if the remaining tenor is 10 years or higher. However, one needs to know certain points before shifting lenders to simplify the process.
Things to remember before opting for a home loan balance transfer
- Evaluate savings- It is vital to keep track of how much savings one can make by transferring the existing home loan balance to a lender offering low-interest rates. Some lenders also charge a certain amount for a home loan transfer. These charges are stamp duty and processing fee. Therefore, one should consider the impact of these charges on the savings before shifting lenders.
- Get NOC from an old lender- The No Objection Certificate from the previous lender signifies that a borrower is going for a home loan transfer without an old lender’s objection. This helps in increasing the chances of transfer approval.
- Eligibility criteria- One can transfer home loan easily upon fulfilling the eligibility criteria from the lender’s end. Various lenders provide different eligibility criteria, which is crucial for the approval of balance transfer. Therefore, a borrower should have a clear idea about these criteria and provide relevant documents for the procedure.
- Application procedure- On performing a balance transfer, an applicant needs to go through a fresh application process. Hence, it is important to note the modes of application and choose the most comfortable one. Besides this, one can also keep track of the new fees that come with the transfer process.
- Selection of a right lender- Analysing markets and comparing various lenders is a must for a borrower looking for a home loan transfer. It is advisable to go for a lender who provides lesser interest rates and good customer service.
Additionally, to calculate savings on transferring a home loan to another lender, one can make use of a home loan balance transfer calculator.
Therefore, these are the things to keep track of while initiating a home loan balance transfer.
Additionally, borrowers should know about the various advantages of transferring an existing loan to another lender.
Benefits of home loan balance transfer
- Lower interest rate
Applicants opt for balance transfer primarily because of lower interest rates. This reduces the EMIs and eventually the loan’s total cost.
- Better services
If you are unhappy with the services provided by your current lender, you can choose to change the financial institution to avail better services from the new lender.
- Top-up loan
Additional funds are a necessity to finance events such as weddings, higher education, etc. To cater to such scenarios, a balance transfer facility can provide top-up loans, which is similar to personal loans as it comes with no-end use restriction.
To conclude, one should know everything about a home loan balance transfer before shifting lenders. Evaluation of impacts, especially on savings, is vital because that is the sole purpose of balance transfers.
Additionally, reputed financial institutions offer pre-sanctioned loan offers to make the loan application procedure hassle-free. You can check your pre-approved offer by providing your name and phone number.